Buying Seychelles company formation with a bank account is an incredibly attractive offer if you want privacy, low maintenance fees, cheap registration, and tax efficiency. But, is this sweetheart deal “too good to be true”? Probably.
After you start doing some research, you’ll find out that this offer might result in more headaches and expenses than you bargained for. Plus, when it comes time to establish relationships with foreign institutions for your Seychelles offshore company, it’s not going to be easy.
So, if you’re considering Seychelles company formation with a bank account, definitely give this article a read first. In it, we detail the common mistakes, misconceptions, and stumbling blocks that you need to be aware of before going down this path.
More importantly, we’ll also outline your options. And, we’ll share some of the lesser-known and overlooked alternatives that offer the same (and sometimes even more attractive) benefits as this corporate setup.
KEY TAKEAWAYS
- Incorporating an offshore company in Seychelles is not a suitable option for everyone
- Forming a Seychelles company with a bank account can lead to many challenges
- Seychelles is not known as a respected offshore financial center
- There are alternative options to consider when looking to set up a company with a bank account
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Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Seychelles Company Formation 101
- Seychelles Offshore Company With a Bank Account
- Benefits of Setting up a Seychelles Offshore Company
- Challenges of Incorporating Seychelles Companies
- Alternatives to Incorporating in Seychelles & Opening a Seychelles Bank Account
- Seychelles Company Formation With a Backup Bank Account
- Opening a Seychelles Bank Account for a Seychelles Company
- Ready to Explore Your Options
Seychelles Company Formation 101
Seychelles offshore companies are not dissimilar to those offshore entities found in other jurisdictions, except for the fact that entities from other jurisdictions tend to have an easier time opening bank accounts.
On the other hand, Seychelles companies have typically been used for holding investments, real estate, and other real assets, it wasn’t until recently that they were considered by digital nomads and location-independent entrepreneurs to support their operating businesses.
But, herein lies the problem. You don’t necessarily need a bank account for a holding company. Instead, you may just need to register shares, or sign contracts. In other words, if your entity could exist with stock certificates, whether bearer or registered and never need to send a transaction, you’re all set.
Of course, if you’re operating an active trading business, have customers and suppliers, need payment processing, and have monthly financial obligations to meet, you need reliable banking.
Don’t get us wrong, just 5-10 years ago, opening a bank account for a Seychelles company in Hong Kong (and other banking hubs) was a breeze. But, today, just finding a bank that will even entertain an application from a Seychelles company is tough.
Seychelles Offshore Company With a Bank Account
Instead of listing all the reasons why Seychelles company formation with a bank account is a bad idea or worth questioning, let’s start by outlining your offshore banking options–then you can decide for yourself.
You see, most offshore companies have a wide range of banking jurisdictions that they can choose from. This is even true for such traditional offshore hubs as BVI, Cayman, Bahamas, and more. But Seychelles is a bit different. Instead of being able to choose from a dozen different countries, Seychelles companies are limited to only a handful of options for banking.
Of course, the country isn’t the only thing that matters–individual banks obviously take into consideration the business activities, transaction activity and volume, and the people involved in the company too. And if you have strong banking relationships already, you might be able to overcome the shortcomings of having a company registered in a high-risk jurisdiction like Seychelles–but, even this can be tough.
Let’s start by taking a look at some of the benefits that a Seychelles company formation with a bank account can offer. Then, we’ll look at the issues and a few possible alternatives.
Benefits of Setting up a Seychelles Offshore Company
Yes, despite the poor reputation and stereotypes, there are some benefits and particular reasons why someone might choose to set up a Seychelles offshore company. But, buyer beware… if you need a bank account for this company, you might struggle to open accounts. But, more on that below.
If you’re incorporating an offshore company in Seychelles, it’s probably because you’re looking for some very specific benefits. These benefits often include a combination of the following:
- Low-Cost Setup
- Privacy (no public registry)
- Zero Taxes (on foreign-sourced income)
- Asset Protection
- No Reporting Requirements
- No Audit Requirements
Note: Company formation in Seychelles does not include the option of using bearer shares (mobile or immobilized). If that is something you are looking for, you will need to consider one of the few other places where they are still available.
Depending on which of the above benefits you’re after, a Seychelles company could meet your objectives. However, it’s important to note that what you actually do with the company matters as well. For example, if you plan on using it for an operational business, sending or receiving international wires, or dealing with clients and suppliers from outside the region, maybe Seychelles isn’t the best choice.
Likewise, where you operate the company matters… a lot. Just because the country of registration (in this case, Seychelles), doesn’t expect your offshore company to pay taxes–you might still have a tax liability.
For example, it’s possible that the country where your business actually operates from will expect your Seychelles company to pay tax. So it’s extremely important to look at CFC rules, permanent establishment, and your tax residency to see if you’re creating a tax liability for yourself. It’s a common mistake that many location-independent entrepreneurs and digital nomads overlook, so it’s worth examining closely.
In any case, make sure to do your homework and speak with a qualified advisor before investing in a new corporate structure that could have tax implications. A bit of homework upfront can save you a lot of headaches later on.
Challenges of Incorporating Companies in Seychelles
It’s important to understand the challenges related to Seychelles companies. But in reality, there isn’t anything wrong with the companies. The fundamental problem is that the jurisdiction itself is high-risk, doesn’t have a good reputation, and is therefore poorly perceived by the rest of the world and the international banking community.
With this in mind, let’s take a look at the issues related to Seychelles and how this could impact you if you set up a company here.
Offshore Jurisdiction
In a recent article, we discussed Seychelle’s offshore banking, so we won’t go into the particulars too much here. Just know that Seychelles is known for being a cog in the offshore machine and doesn’t have a great reputation internationally. In fact, many bankers view the structure and the jurisdiction itself with suspicion.
Poor Reputation Internationally
Perhaps because of its small size, remote location, its history of political instability, and track record of catering to unsavory characters in the past, Seychelles never really developed into a respected offshore financial center. Even offshore jurisdictions with spotty histories like Cayman, Bahamas, Bermuda, Mauritius, and BVI command more respect.
Future Bank Account Closures
With this in mind, snagging a deal for Seychelles company formation with a bank account actually will have more risks and challenges in the future than opportunities. Even if you purchase a company from a service provider, who promises you’ll be able to open a bank account after the company is set up, it’s entirely possible that this account will be terminated a month after it’s opened.
That’s why it’s important to have backup accounts in place before your account is closed. Alternatively, if it’s possible, you may want to consider setting up your company in another jurisdiction altogether. This can increase the number (and quality) of banking options available to you. We’ll take a look at both backup accounts and alternative company jurisdictions now.
Alternatives to Incorporating in Seychelles & Opening a Seychelles Bank Account
Now that we’ve discussed the benefits and challenges related to Seychelles company formation with a bank account, let’s discuss some of the alternative options for company setup.
Of course, you may have specific reasons for wanting to set up a company in Seychelles. Perhaps due to your citizenship, residency, or a particular tax treaty. But, in most cases, those same benefits can be achieved with a lower-risk structure. Such alternative options might include any of the jurisdictions outlined below.
Forming a Company in Seychelles for Privacy:
If you’re considering Seychelles company formation with a bank account for privacy, then one of the following jurisdictions could offer equal or better protection of your personal information. People interested in privacy often look for jurisdictions that do not have a public registry for shareholders and directors. Here are a few examples:
- British Virgin Islands Offshore Company
- Marshall Islands Company
- Panama Offshore Company
- Canadian Limited Partnership
- Wyoming Limited Liability Company
- Nevada Limited Liability Company
- Delaware Limited Liability Company
Forming a Company in Seychelles for Tax Efficiency:
If you’re considering Seychelles company formation with a bank account for tax efficiency, one of the following jurisdictions could offer equal or better tax benefits. Of course, this might depend on the country you’re from, your tax residency, or the specific tax treaties that you’re looking to leverage. In all cases, make sure to speak with a qualified advisor before making any final decisions.
- British Virgin Islands
- Bahamas
- Barbados
- Marshall Islands
- Ireland
- Panama
- Singapore
- United States
- United Kingdom
Forming a Company in Seychelles for Asset Protection:
If you’re considering Seychelles company formation with a bank account for asset protection, the following jurisdictions could be worth considering. That said, in most cases, setting up a company with an international bank account will not truly provide asset protection. In most cases, you need a trust or foundation from a jurisdiction with strong asset protection laws. However, these structures come with their own set of banking challenges. Here are a few jurisdictions that you might consider if you are looking for asset protection:
- Bahamas Trust
- Barbados Trust
- Cayman Islands Trust
- Cook Islands Trust
- Nevis Trust
- Liechtenstein Foundation
- Jersey Trust
- Swiss Trust
- Panama Foundation
- South Dakota Trust
Forming a Company to Invest or do Business in Seychelles
If you’re considering Seychelles company formation with a bank account for the purpose of doing business in or investing in (or through) Seychelles, you might be surprised that there are better jurisdictions for this also… well, maybe. Ultimately, what’s best boils down to the type of business and the level of local and international transactions that you plan to have.
In other words, if you’re setting up a local business that operates locally, then you might want to consider Seychelles company formation with a bank account locally. However, if you’re planning on doing business abroad, Seychelles companies might face some challenges.
Instead, you might want to consider the jurisdictions that you’ll be doing business with and see which structures are popular there. Then, determine whether it’s worth setting up a local entity or considering one of the countries mentioned above.
Seychelles Company Formation With a Backup Bank Account
If after reading this article you still plan to move forward with Seychelles company formation with a bank account, then it’s paramount that you open backup bank accounts. The reason for this is that most banks don’t like Seychelle’s companies. They’re viewed as high-risk. So even if you are able to open an account at first, it’s very possible that the bank will terminate your account in the near future. That’s the case even if you and your business have a sparkling reputation.
Even when companies are registered in stable jurisdictions, we suggest opening backup bank accounts. After all, having backup accounts is the only way to ensure that your businesses can continue transacting if your primary account gets shut down or is temporarily frozen.
And yes, account closures and freezes are happening more frequently these days.
EU List of Non-Cooperative Jurisdictions for Tax Purposes
The best example is the constantly changing EU blacklist. Created by the European Council, the EU blacklist is a list of countries that the organization considers “non-cooperative jurisdictions” for tax purposes.
When a country is listed on an EU blacklist, it’s damaging to the domestic economy and anyone who has a company registered there. And, the implications are wide-reaching. If you’re doing business, banking, or have a company that is registered in an EU blacklist country, you’re impacted. And, The way EU countries and banks view companies from non-cooperative jurisdictions is also damaging. Overnight, they have accounts terminated and it can become extremely difficult to open accounts until the country is removed from the blacklist.
For example, many foreign banks depend on EU correspondent banking relationships in order to send and receive international transfers. This is especially important for offshore jurisdictions that have lost North American correspondent relationships over the last five years.
That said, it’s worth noting that Seychelles is currently on the EU list of non-cooperative jurisdictions. Yes, this will make account opening more challenging and can limit your banking options.
Opening a Seychelles Bank Account for a Seychelles Company
If you’ve decided that going ahead with Seychelles company formation with a bank account is the best option available, you’ll be pleased to know that despite the challenges, it’s still possible to open a bank account.
In fact, with the right information, account opening strategies, and knowledge on which specific banks (and bankers) to contact, you can still open bank accounts in a few stable banking jurisdictions.
We cover how you can do this, and detail specific account opening strategies in our recent report How to Open International Bank Accounts for Offshore Companies.
This report includes specific strategies, tips, actionable information, details on the best bank for a BVI company, and banks that cater to offshore companies incorporated in jurisdictions like Seychelles, Belize, Panama, and more.
Of course, you get immediate access to this report and all our other banking reports when you join GlobalBanks Insider.
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